The Korean Journal of Economic Studies
A Study on the Long-Term Trend of Inequality of Opportunity for Income Acquisition in Korea using KLIPS and HIES
Jisub Shin (Seoul National University) and Biung-Ghi Ju (Seoul National University)Year 2021Vol. 69No. 1
AbstractInequality of opportunity for income acquisition exists when the prospect(probability distribution) of income acquisition with a higher parentalsocio-economic status dominates the prospect with a lower parentalsocio-economic status. Our main objective is to analyze the existence and the long-term trend of this inequality of opportunity in Korea. Our concept of opportunity inequality relies only on simple information on parentalsocio-economic status such as education level, which facilitates our inquiry of the long-term trend. We use both the Household Income and Expenditure Survey (HIES) and the Korean Labor & Income Panel Study (KLIPS). We consider individual households in KLIPS and estimate their household permanent income using HIES. We show persistence of the inequality of opportunity over the period from 1990 to 2016. We analyze the degree of inequality of opportunity using Gini opportunity inequality index and the Rags-to-Riches opportunity inequality index. Both indices exhibit increasing long-term trends, which are statistically significant. We also find that the opportunity inequality indices decline more than 50% when they are measured among individuals with college education. This shows that education plays an important role in overcoming opportunity inequality due to ones’ parental or family background.